Monday, September 12, 2011

Rural land prices surge across southern Ontario

Christine Hamilton searched the Internet every day for a year for a rural home where the nearest neighbour could neither be seen nor heard.
When 23 acres of pine forest west of Barrie came on the market, she and her husband Terry snapped it up, joining a resurgence of city dwellers buying properties for such uses as hobby farms and horse farms.
“We’re deep in the country now — we love it,” she says. “Our dream eventually is to get horses.”
The typical southern Ontario hobby farm or horse farm occupying 10 to 20 acres — with a house, barn and equipment — now commands $450,000 to $550,000, says the annual Remax report on farmland prices issued Monday.
Buyers tend to be in their 40s with young families wanting to escape city life.
The Hamiltons paid $550,000 for a three-bedroom bungalow with three bathrooms and a fireplace, a small barn, a three-bay garage and a driveway more than 1 kilometre long.
It cost less than their city home on a one-acre lot in Georgetown.
He is 49, she 48. He works as a mechanic. She works in retail at the Sheridan Mall near the base of Highway 400 in Toronto. Their longer-term plans are to clear part of the pine forest for horses and retire on the property.
“The sooner the better,” she says.
A rise in food prices and a shortage of farmland hitting the open real-estate market are combining to drive up rural and agricultural land prices generally across southern Ontario, the Remax report says.
“Half of the market reported double-digit increases ranging from 10 per cent to 50 per cent (over last year),” said Charlene McAdam of Point Blank Communications, one of the report’s authors.
“With that kind of appreciation year over year, there is no question (farmland) is outpacing gains you might even see in the residential market,” she said.
Former city dwellers looking for hobby farms also continue to eye Grey County, south of Georgian Bay and including such communities as Egremont and Neustadt.
A typical 100-acre farm with a home currently sells there for $400,000 — up from $375,000 a year earlier, the report says.
Hobbyists typically sever the homestead from the working land, and either sell or rent the land to local farmers.
One result is the refurbishment of many older farmhouses and farm buildings, as former city dwellers favour updated structures with modern conveniences, the report says.
Ontario’s most valuable farmland continues to be the Holland Marsh vegetable fields between Highway 9 and Lake Simcoe, where stretches of rich, organic soil sell for $20,000 an acre and more.
“It’s now hard to find a typical 100-acre farm for less than $2 million,” the report says.
Developers looking to build in the regional commercial centre of Bradford, pay up to $100,000 an acre for land next to the town.
At the same time, large parcels of farmland rarely hit the open market, the report says, as one generation passes land to the next or large operations buy from smaller neighbours.
“When a rare parcel does hit the market in either Holland Marsh or Bradford, it’s not uncommon to sell virtually overnight,” the report says. Most buyers continue to be local farmers set on working the land, it says.
As part of a long-term trend toward farmland consolidation — farms increasing in size to boost production — the absolute number of Ontario farms dropped to 82,410 in 2006 from 85,015 in 2001, the report says, citing the most recent available numbers.